We study the role that the option to terminate a relationship has on cooperation in a repeated prisoner's dilemma. While cooperation is, in theory, sustainable with or without this option, we show experimentally that cooperation rates are significantly lower with the option to terminate. Rather...

We study an original equipment manufacturer (OEM) purchasing two inputs for assembly from two suppliers with private cost information. The OEM can contract with the two suppliers either simultaneously or sequentially. We consider both cases in which the OEM has relatively equal bargaining power...